It is no secret to those in the payment processing industry that the sector as a whole is at the beginning of what could be a major paradigm shift. Over the past 30 years, credit card payments have been pretty consistent with only the occasional technology upgrade allowing quicker transactions or more convenient ways to pass a card number on to a merchant.
That is all about the change.
As discussed in detail throughout this site, Square has been a front runner in the mobile credit card processing race with their smartphone attachment allowing merchants to swipe credit cards directly on an iPhone or Android-based phone. In fact, just earlier this week they announced a recent venture capital deal that pumped $100 million into the start up and gave it a valuation over $1 billion. Not bad for the co-founder of Twitter.
Square allows for more convenient credit card processing, but is that the way of the future? PayPal’s president Scott Thompson does not completely agree.
PayPal has been an innovator and sector driver for many years in the intenet-based payment business. They have branched out into debit and credit cards, but their core has been the digital transfer of funds between individuals and businesses over the web.
Thompson believes that by 2015 credit cards and possibly a wallet in general will be obsolete. He is betting his money and that of his company’s in wireless payments. This will include web-based, smartphone payments, etc.
Google recently launched a new phone with a near-field communication (NFC) chip in it that allows a consumer to simply swipe their phone in front of a point-of-sale terminal and have it charge to a linked credit card. It is called Google Wallet. This technology is similar to the credit cards that have the NFC chips embedded in them.
The question becomes who will win out? Square is poised to win the race if consumer behavior sticks with the plastic credit card. Should the habits change and start pointing towards smartphones and wireless payments, then Google and PayPal could come out as front-runners.
Regardless, it is safe to assume that 2 years from now will look a lot different than today in the payment processing industry and merchants should be prepared for whichever direction wins out.
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